South Australian Minister for Investment and Trade Martin Hamilton-Smith has downplayed recent regulatory changes in China around foreign goods purchased online and urged Australian businesses to “more fulsomely embrace” Chinese e-commerce.

Speaking in Shanghai, Mr Hamilton-Smith said that while Austrade were still seeking clarity around the recent regulatory changes around food imports, it seemed that the “grey channel” of goods going into China were the target of the measures.

“The grey channels through a number of borders has been a part of the story for a long time and it’s largely escaped proper taxation, so you can’t be surprised that the Chinese would want to have visibility and revenue,” the minister said.

Import tariffs

In April, the Chinese government announced it would enforce import tariffs on goods imported under the cross border e-Commerce model, instead of a lower “parcel” tax rate, which they previously enjoyed and had proven hugely popular. Beijing also announced a “positive list” of about 1,200 product types allowed for import via one of the country’s 13 free-trade zones and then sold on e-commerce platforms like JD.com and T-mall.

But the trade minister said he was “focussed but not alarmed about the development”, saying if the policy was aimed at opening up “proper channels” it was “consistent with the free trade agreement” which came into force just four months ago.

Opportunities in China’s e-commerce sector

Mr Hamilton-Smith urged South Australian businesses to take advantage of the opportunity provided by the burgeoning Chinese e-commerce sector to sell goods into the world’s second largest economy.

“The Chinese respond, as do Australians, to a genuine interest and engagement with their business partners”

The state’s Trade Minister joined the national government’s ‘Australia Week In China’ trade delegation in Shanghai after visiting South Australia’s sister state of Shandong.

South Australia delegation

The South Australian delegation of about 300 representatives from state and local government, businesses, universities and sport clubs was the biggest outbound trade mission South Australia has ever mounted, and the biggest inbound trade mission Shandong’s ever hosted, according to the Minister.

The trip marks the 30th year of South Australia’s sister state relationship with Shandong. The Minister said the delegation wanted to go deeper into the province to third tier cities such as Linyi and Yantai where they received “a significant response”.

The more localised strategy was reflected on the Australian side too with 12 mayors and 19 councils represented on the trip.

Despite a recent report by KPMG and University of Sydney which showed South Australia received just 3 per cent of China’s direct investment in Australia during 2015, the Minister said when oil, gas and mining were stripped out, the remaining sectors of food, wine, services, students , medical devices, high-tech, bio-tech, were seeing an upswing.

The trade minister said it was a good time for Chinese businesses to take advantage of low prices in the resources sector to position themselves for the upswing in resources, oil and gas.

“It’s hard to get an iron ore project up at the moment in the current climate, but if you look at that through another lens, it’s an opportunity because prices are down,” Mr Hamilton-Smith said.

The minister said China Railway Corp and Shandong Steel have been in discussions with Iron Road for some time and that companies like ENN had already seen the opportunity of low prices to buy into Australian companies and have “grabbed it”.

Mr Hamilton-Smith said he had met with a number of Chinese investors on his trip including ENN, who recently bought a 12 per cent stake in Santos for $US750 million, and Yanhua, who are buying a lot of oat and wheat from Balco for Chinese feedlots.

The trade minister said the delegation also put a lot of emphasis on the cultural aspects of engagement with China, taking with them the Adelaide 36ers basketball team, a group from the Adelaide Symphony Orchestra and jazz musician James Morrison.